Sunday, 17 July 2011

The Great Greek Taxi Strike

One of my many friends from the Athens taxi driving community picked me up at 16:20 from Geraka this afternoon for my ride to the airport. The cab reeked of cigarettes and Derti FM was wailing some song of misery. This driver was from Glyka Nera, just across Marathonos Avenue, so we spoke as neighbours.

The great subject of the day is the taxi strike which, barring any last-minute compromises, will start tomorrow. Travellers to Athens, and indeed all Greece, should be prepared for at least two days of transport problems. The strike may turn nasty, as the drivers are debating whether to close access to airports and ports in an effort to get their views across.

The issue the drivers are protesting is the “liberalisation” of the taxi driving profession. Ostensibly a great priority for the Troika, this liberalisation means that in principle, anyone who applies will be granted a license for a taxi, subject to certain conditions.

One such condition, which has not been fully understood, is the fact that there will still be a cap on the total number of licenses provided, based on a ratio of taxis per 1,000 inhabitants. This limit was originally set at 2.5 licenses / ‘000, but we understand it may be increased to 4 / ‘000 in Athens and Thessaloniki. According to other versions, including the statement attributed to the new Minister of Transport, there will be no cap at all.

Assuming there is a cap, it is impossible to understand what is actually being liberalised. There are 4 million residents in the greater Athens area: assuming a ratio of 2.5 taxis per 1,000 residents, then there should be no more than 10,000 taxis working in the greater Athens area. There are currently 13,500 taxis at work, which explains why fare revenue per driver is so low.

Quantitative caps aside, the impact on the actual market is apparently profound, if we believe the taxi drivers. There are reports of hundreds of applications being submitted for licenses, with a low application fee set by the Ministry. How this can be true if the “quota” has been exceeded is unknown. Nonetheless, it is a major reason for the taxi strike tomorrow.

The drivers are up in arms for two additional reasons: First of all, most drivers had purchased their licenses, typically from another driver, for between EUR 100,000 – 200,000 (values according to the past 10 years). Traditionally, the value of the licenses was intended as a form of pension payment or, in corporate terms, goodwill. However, this also reflected the time when it was actually possible to make a respectable living by driving a taxi. By granting “free” licenses, this value has been eliminated.

Yet the fact that many drivers have taken a loan to pay for this “license value” makes things far, far worse. Similar to the US borrowers who’s homes are now worth less than their mortgages, a good number of drivers are underwater. Unlike the US borrowers, however, the Greek lending standards require real collateralisation: many drivers have pledged their houses. A good many people stand to be destroyed as a consequence.

The second reason is that business has fallen dramatically. With fuel rates at a historic high and a recession now in its third year, most drivers report an average net income of EUR 40-50/day after all driving expenses (car loan, fuel, maintenance, etc.) are taken into account. Most drivers work 12 hour shifts, 6 days a week. To put this level of effort for a gross income (before taxes) of EUR 1,040-1,300 EUR/month is debilitating.

Unfortunately, this is yet another area where the implementation of structural reform is mistake in its scope and abysmal in its execution. In the grand scheme of things, liberalising the taxi trade is an absolute non-issue compared with the other pressing issues affecting Greece. It won’t result in lower rates, since taxi tariffs are fixed (as they are in all other European countries). It also won’t result in higher demand, since there is no shortage of taxis offering their services in the market, and since there are already more taxis available than is reasonable, compared to other European cities.

To claim, therefore, that this liberalisation will somehow lead to greater economic activity or consumer benefit is wrong. With all the major issues affecting the country, one would have hoped that the Troika, in its infinite wisdom and economic competence, would be encouraging the government to spend its limited political capital on the main priorities, not on the non-essential ones. This is apparently not the case.

It’s regrettably less surprising that the government has not been able to successfully communicate what the liberalisation means to the drivers, or to implement it rationally. PASOK has consistently made a hash of this, but in this case it maintains a strong tradition of failure which it proudly shares with New Democracy.

Less than 1 month ago, former Minister of Transport Dimitris Reppas had reached agreement with the drivers’ union on reform, based on 2.5 licenses per 1000 inhabitants. The drivers had accepted this. Now, one cabinet reshuffle later, the new Transport Minister Yiannis Ragousis has proposed changes without any apparent consultation, in which the principle of capping licenses per population has apparently been dropped.

In addition, no part of the proposed “reform” addresses the issue of the lost license value. My advice to the taxi drivers is to seek legal counsel on whether the liberalisation constitutes a “force majeur” or not. If so, they should take mass action to stop their loan payments on licenses. It’s only when the banks start screaming that the government or the Troika will actually understand what the drivers are talking about.

The result of this abysmal failure of policy and basic common sense will be the taxi strike that will take place starting tomorrow. With summer temperatures above 38 degrees, and with the tourist season in full swing, Greece is headed for yet another pointless confrontation that solves absolutely nothing.

Barring a last-minute reprieve, I expect Bloomberg, CNN, Reuters and everyone else to publish photos and clips of striking taxi drivers starting tomorrow, with perhaps a few getting clubbed by police. I expect to see tourists stranded or missing their flights or ferry trips, because there aren’t any taxis available. I expect that millions of derogatory comments about “the Greeks” and their inability to “reform” will be written in the blogosphere or in the New York Times as a result.

And thus this pointless game continues. If stupidity were a human art, the past 14 months has elevated our government officials and our Troika bosses to Olympian heights. Tomorrow the sacrifices resume.

In fact, the license cost reached EUR 200,000 during the boom years. But during this time, the daily net income could be much higher: EUR 100-150 from own efforts, plus the "rent" from 1/2 the taxi share (the other driver). Business has fallen tremendously because of the recession.

What we found is although there was a taxi strike in July and August, 2011, if you reserved a minivan or minibus, you were able to get transportation from the "taxi" services. If you reserved a regular cab, you were just out of luck.

I agree with Anonymous (September), we arranged for G's T to pick us up at the airport - confirmed with a c.c. to hold the reservation and prepared to pay Euros, as he asked when transportation was complete.

No one was there to pick us up until we called and an employee of G's T came with his own car. The bad was when we confirmed out pick up to go back to the airport - no one showed up - when we called, they told us we had no reservation. However on Trip Advisor, some people who did reserve during the strike, were picked up by minivan.

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